A Question of Fairness

By William Neuman

The New York Times

November 23, 2011

Rink Dickinson, president of Equal Exchange, a pioneer importer of 

fair trade coffee, chocolate, tea and bananas. 

Mr. Dickinson called the move by Fair Trade USA a "betrayal."

A tempest in a coffee pot is bubbling in the world of “fair trade,” the socially responsible food movement that seeks to lift farmers in the developing world out of poverty by offering them a premium for crops like coffee, cocoa and bananas. And the fight will soon reach your local Starbucks, Wal-Mart and Whole Foods.

Fair Trade USA, the movement’s leading advocate in the United States, angered critics by saying it would cut its ties at year’s end with the main international fair trade group and make far-reaching changes in the sorts of products that get its seal of approval.

The changes include giving the fair trade designation to coffee from large plantations, which were previously barred in favor of small farms. The group is also proposing to place its seal on products with as little as 10 percent fair trade ingredients, compared with a minimum of 20 percent required in other countries.

The group says the changes will benefit more poor farmers and farm workers around the world and make it easier for large corporations to sell fair trade products. Sales of fair trade goods in 2010 were $1.3 billion in the United States and $5.8 billion globally. Fair Trade USA said it hoped to double sales in the United States by 2015.

Critics accuse Fair Trade USA of watering down standards, perhaps motivated by the bigger fees to be earned from certifying a higher volume of products. Some sellers of fair trade products fear that small coffee farmers will lose market share to the big plantations and that companies will have an incentive to include only the minimum amount of fair trade ingredients in their products.

“It’s a betrayal,” said Rink Dickinson, president of Equal Exchange, a pioneer importer of fair trade coffee, chocolate, tea and bananas, based in Massachusetts. “They’ve lost their integrity.”

Paul Rice, chief executive of Fair Trade USA, said the fair trade movement was dominated by hard-liners who resisted needed changes. “We’re all debating what do we want fair trade to be as it grows up,” Mr. Rice said. “Do we want it to be small and pure or do we want it to be fair trade for all?”

He dismissed criticism that his group was seeking to increase revenue for its own sake. “The more we grow volume, the more we can increase the impact” of fair trade, he said. In 2010, companies that sell fair trade products paid the group $6.7 million in licensing fees, which are meant to pay the cost of auditing a company’s production to make sure its fair trade claims are accurate.

As part of his efforts to expand the fair trade designation, Mr. Rice is cutting ties between his group and an umbrella organization, Fairtrade International, which coordinates fair trade marketing activities in close to two dozen countries. He said his group paid outsize fees to Fairtrade International — about $1.5 million last year — and received little in return. The international group has also rejected the changes put forth by Mr. Rice.

“The best thing we can do is make sure we’re staying true to the principles that got us to where we are,” said Rob S. Cameron, the chief executive of Fairtrade International. “I’m not going to water those principles down.”

The brouhaha has surprised many companies that sell fair trade products and will soon be forced to take sides. For consumers who pay attention to where their food comes from and how it is produced, the result could be confusion as they try to sort through a proliferation of competing fair trade labels with differing claims.

The logo overload will include a redesigned Fair Trade USA seal; a Fairtrade International seal, which previously did not appear in this country; and labels from smaller programs, like one run by Catholic Relief Services.

Coffee, which Mr. Rice said accounted for more than 70 percent of the fair trade market in the United States, is at the center of the dispute.

Green Mountain Coffee Roasters, which calls itself the largest buyer of fair trade coffee in the world, said that it would continue to work with Fair Trade USA as it sought to increase the amount of fair trade coffee it used.

The company is participating in a pilot project with Fair Trade USA involving a 500-acre organic coffee plantation in Brazil, a farm that previously would have been too large to get fair trade certification.

“Our ongoing commitment to small-scale farmers remains intact,” Sandy Yusen, a Green Mountain spokeswoman, said. “We also believe that Fair Trade USA’s vision presents new opportunities that allow us to impact even more farmers and workers.”

Ms. Yusen said that Green Mountain bought 26 million pounds of fair trade coffee in 2010; in that year, it paid $1.5 million in licensing fees to Fair Trade USA, making it the largest source of revenue for the nonprofit group, according to federal tax filings.

Starbucks, which has about 11,000 coffee shops in the United States, also said that it planned to continue using Fair Trade USA to certify coffee it sells in this country. However, the company said that it had not decided whether to place a fair trade label on coffee grown on large plantations. Starbucks said that about 8 percent of the coffee used in its global operations came from fair trade farms in 2010, or about 21 million pounds.

Wal-Mart and Whole Foods also sell fair trade coffee and use fair trade ingredients in store-brand products; both companies said they were evaluating the situation.

About two dozen countries have fair trade labeling organizations that license companies to market fair trade products. Fairtrade International provides a uniform logo for use on packaging in most countries.

Most fair trade programs around the world already allow bananas, tea and flowers to be grown on large farms. But traditionally, fair trade coffee and cocoa had to come from small farms organized into cooperatives. The farmers receive a premium for use in community projects, like paying for schools or medical care.

Those poor farmers were once isolated from markets in the developed world and had to sell at a low price. Fair trade organizations help them improve product quality and, most important, give them access to a world market.

Mr. Rice said bringing large plantations into the fair trade sphere would mean that workers on those plantations, whom he called “the poorest of the poor,” could also begin to receive benefits. “We’ve developed a vision for that bigger, better model of fair trade,” he said.

But critics say that large plantations do not need help getting access to major markets, and the small coffee farmers who have been at the heart of fair trade could be squeezed out.

“Starbucks, Green Mountain and other coffee companies will be able to become 100 percent fair trade not because they’ve changed their business practices one iota but because Fair Trade USA has changed the rules of the game,” said Dean Cycon, founder of the Dean’s Beans Organic Coffee Company, in Orange, Mass.

Seth Goldman, the co-founder of Honest Tea, said the rift had prompted his company, now owned by Coca-Cola, to take a closer look at the workings of fair trade. He said that in the first 10 months of this year, Honest Tea paid about $51,000 in premiums destined to help farmers or farm workers. At the same time, it paid $37,000 in licensing fees to Fair Trade USA.

Mr. Goldman said he would like to see more money go to help farmers and less to pay administrative and auditing costs.

He said the company would decide in the next few weeks whether it would continue to work with Fair Trade USA or arrange to use the Fairtrade International logo on its products instead.

He called the dispute a mess, but added, “Opening up a can of worms gives us a chance to understand what’s in the can.”